Making Plurilateral Initiatives Work for All: Reforming the WTO Through Inclusive and Development-friendly Approaches
Attribution: M. Sait Akman et al., “Making Plurilateral Initiatives Work for All: Reforming the WTO Through Inclusive and Development-friendly Approaches,” T20 Policy Brief, May 2023.
Abstract
Updating the World Trade Organization (WTO) rules has become imperative to address pressing global issues such as food security, pandemic responses, climate and the environment, and emerging areas in services trade. Plurilateral agreements can be a viable option where achieving multilateral consensus in the WTO is difficult. To ensure that they advance the multilateral trading system, plurilaterals should follow an inclusive and development-friendly framework. They should have a layered architecture of rights and obligations and encompass capacity-building measures. WTO members should initiate plurilaterals on topics that are of particular concern to developing countries and least developed countries, and can help achieving the Sustainable Development Goals. The G20 can play a decisive role in fostering mutual understanding on plurilaterals, for example by establishing a taskforce on plurilaterals in the G20 Trade and Investment Working Group.1. The Challenge
The World Trade Organization (WTO) is under immense pressure. While the 12th Ministerial Conference (MC) held in June 2022 achieved substantial outcomes in some areas and emphasised the need to better integrate least developed countries (LDCs) into world trade and the multilateral trading system, the WTO needs to be reformed to be fit for purpose. The G20 acknowledges this reform necessity and plays a crucial role in providing momentum and ideas.Since the last substantial update of the multilateral rulebook on trade almost 30 years ago, the nature of world trade has changed: for example, e-commerce is becoming more important, sustainability and health issues play a growing role, and the resilience of global value chains has become a major concern. This makes updating the WTO rules book paramount. However, against the background of an increasingly contested geo-economic environment and the diverging economic and political interests of WTO members, reaching multilateral consensus has become difficult.In this environment, many WTO members view “open plurilaterals”—agreements among sub-groups of members that only bind signatories but may also create benefits for non-signatories—as an expeditious way to address many of today’s most pressing global challenges.The WTO’s 11th MC launched several plurilateral negotiations, the Joint Statement Initiatives (JSIs). The JSI on services domestic regulation was successfully concluded at the end of 2021, while a breakthrough was reached in the Investment Facilitation for Development (IFD) talks in the spring of 2023.However, some developing countries warn[1] that plurilaterals may undermine the multilateral approach, go against the WTO rules, unduly restrict policy space for non-members, and marginalise the core interests of developing countries. They are concerned that developing countries lack the capacities for agenda setting, negotiations, and effective implementation.In general, developing and emerging countries do not participate widely in the other JSI negotiations.[a],[2] An exception is the IFD JSI, which is being negotiated by more than two-thirds of the WTO membership, and emerging and developing countries can even be considered to be among the main drivers.This policy brief analyses how the concerns of the developing countries and LDCs can be better addressed to make plurilateral negotiations and agreements more inclusive and development friendly.Inclusiveness: Inclusiveness refers to both the negotiation and implementation of a plurilateral agreement. Countries need to have the capacity for both. Furthermore, the interests and unique circumstances of developing countries and LDCs need to be respected. In addition, the accords should allow for the possibility to multilateralise their disciplines.Development-friendly: An agreement is development-friendly if it not only fosters economic growth but does so in a way that contributes to achieving the Sustainable Development Goals (SDGs).WTO compatibility: The legitimacy of plurilateral negotiations is recognised by the existing rule book of the WTO and by the decades-long practice of its members. A key aspect of ensuring the WTO compatibility of plurilaterals is to design them as open plurilaterals ensuring that countries willing to join can do so and that the rules apply on a non-discriminatory basis so that non-signatories may also benefit. This way, there is little risk that they will advance the fragmentation of the world economy, which the international community is currently witnessing.Challenges that Plurilaterals Can Help to Overcome
- Overcoming stalemate in multilateral negotiations
- Overcoming fragmentation and advancing multilateral trade rules
- Overcoming structural impediments faced by developing countries
- Selecting the right topics for developing countries
2. The G20’s Role
The G20 has not only repeatedly recognised the importance of the WTO but also the need to reform the multilateral organisation.During the Australian G20 presidency in 2014, leaders committed to “to ensure our bilateral, regional and plurilateral agreements complement one another, are transparent and contribute to a stronger multilateral trading system under World Trade Organization (WTO) rules.”[3] The Turkish G20 Presidency of 2015 suggested ensuring the complementarity of plurilaterals with the multilateral trading system, while the Chinese G20 Presidency in 2016 recommended that “WTO-consistent plurilateral trade agreements with broad participation can play an important role in complementing global liberalization initiatives.”[4] During the German G20 presidency, leaders noted the importance of “plurilateral agreements being open, transparent, inclusive and WTO-consistent”.[5]In the Riyadh Initiative on the future of WTO reform, which was initiated during Saudi Arabia’s G20 presidency in 2021, most members suggest that open plurilateral negotiations could be pursued by members who were ready to move ahead on particular issues. It was mentioned that these initiatives can pave the way for multilateral outcomes. The initiative also noted the concerns by other members.[6] The Indonesian G20 presidency discussed taking forward the WTO work programme on e-commerce and the open plurilateral on e-commerce, even while noting the concerns on the JSIs.[7]3. Recommendations to the G20
- A Principles-based approach to plurilaterals
- A multitiered framework for plurilaterals
- Development-friendly enforcement
- All members of a plurilateral agreement should be fully subjected to the WTO Dispute Settlement Mechanism (DSM) concerning any provision of the said agreement.
- In accordance with the SDT provisions of a plurilateral agreement, developing countries should be granted grace periods during which they are exempted from the application of the DSM. With the level of development considered, LDCs should enjoy extended grace periods.
- When the grace period provided expires, a developing country member could be brought to the DSM for a dispute concerning only provisions that said member has designated for implementation.
- In addition to the DSM, mechanisms should be considered to support effective implementation of a plurilateral agreements, such as monitoring, notifications, and implementation reports. This is particularly important considering the current DSM crisis.
- Furthermore, plurilateral agreements should establish an early warning mechanism. The expert advisory group could identify specific implementation problems and offer solutions outside of arbitration or panel decisions. It could also be used to help solve conflicts through evidence-based analyses, which identify specific constraints for implementation. This group could also draw on the expertise of relevant international organisations.
- Integrating capacity-building measures into plurilaterals
- Ensuring inclusive topic selection
- Ensuring good governance
- Use the G20 as a facilitator for plurilaterals
Attribution: M. Sait Akman et al., “Making Plurilateral Initiatives Work for All: Reforming the WTO Through Inclusive and Development-friendly Approaches,” T20 Policy Brief, May 2023.